Analysts assess credit trends in global financial markets
The S&P Global Ratings experts have analysed credit trends for 2025. According to the study, the global market should see an increase in bond issuance. This is due to stable issuance in the third and fourth quarters of 2024.
According to analysts, global bond issuance will grow by 17% in 2025, with an increase of 4%. It is worth noting that despite geopolitical tensions and record-high interest rates, issuance remained stable throughout 2024.
Experts note that the global market has adjusted to interest rates. Their decline is a positive factor stimulating bond issuance. In 2025, global regulators are likely to continue cutting interest rates, which will be positive for the credit sector. Lower interest rates also stimulate M&A activity. This and other debt-driven sectors continue to recover. However, growth is still slower than before the pandemic.
Investment-grade bond issuance should increase in 2025. The total amount of debt outstanding rated BBB—or higher is US$7.6 trillion. It matures between 2025 and 2028. This figure is higher than at the start of 2024 when it stood at US$7.26 trillion. At the same time, total issuance volumes have been high throughout the previous period. One reason for this trend was the increase in the number of securities with a short-term maturity. Many global financial institutions took advantage of this option.
Factors influencing the market
A moderate increase in issuance is likely in 2025. However, experts have highlighted the drivers that could lead to a growth spurt. Among them are:
1. Economic growth. If inflation continues to fall, good momentum can be expected. In addition, the possible issuance of a large number of securities in China will also have a positive impact on the market.
2. Investment in AI. Technology companies are resorting to bond offerings to raise funds for the development of AI infrastructure.
3. Geopolitical tensions. This could lead to an increase in sovereign debt, which will raise borrowing costs.
4. Global trade. Inflation threatens this sector. Its rate of decline is still quite slow, which could affect central bank policy. Regulators may pause the easing of measures to keep inflation in check and slow the pace of interest rate cuts.
So far, however, analysts do not see the conditions for a sharp market slowdown or a recession. On the contrary, many are talking about growth in the near future. At the same time, we should not forget that some of the factors mentioned above are interrelated. Their combined pressure is extremely dangerous for the stability of the system as a whole.
